9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (1) TMI 1404 - AT - Income TaxDisallowance of gratuity payment - Held that - From a bare reading of Section 36(l)(v) of the Act, it is manifest that the real intention behind the provision is that the employer should not have any control over the funds of the irrevocable trust created exclusively for the benefit of the employees. In the instant case, it is evident from the findings recorded by the Commissioner and affirmed by the Tribunal that the assessee had absolutely no control over the fund created by the LIC for the benefit of the employees of the assessee and further all the contribution made by the assessee in the said fund ultimately came back to the Textool Employees Gratuity Fund, approved by the Commissioner with effect from the following previous year. Thus, the conditions stipulated in Section 36(1)(v) of the Act were satisfied. - Decided in favour of assessee Addition towards provision for standard assets under the head provisions and contingencies - Held that - Having regard to the rival contentions and material on record, we find that this issue is already decided by the coordinate bench of this tribunal in the earlier A.Ys against the assessee and respectfully following the same, we confirm the order of the CIT(A) on this issue. Loss on valuation of mutual funds - Held that - CIT(A) has followed his own order for the A.Y 2009-10 for upholding the disallowance. We find that this issue had come up for consideration before the coordinate bench of this tribunal for the A.Y 2009-10 and the Tribunal had remanded the issue to the file of the A.O with a direction to reconsider the issue in accordance with the decision of the Hon ble Apex Court in the cases of the Catholic Syrian Bank (2012 (2) TMI 262 - SUPREME COURT OF INDIA) and Vijaya Bank reported in 2010 (4) TMI 46 - SUPREME COURT . Respectfully following the same, we remand this issue also to the file of the A.O for reconsideration in accordance with the directions as above. Disallowance of claim u/s 36(1)(viia)- Held that - This issue is covered against the assessee by the decision of the coordinate bench of this tribunal in the assessee s own case for the A.Y. 2008-09 Disallowance of salary arrears - Held that - We deem it fit and proper to admit the additional ground of appeal and remit it to file of the A.O for reconsideration in accordance with law and the judicial pronouncements on the issue. AO is therefore to directed to decide the same afresh after giving the assessee a fair opportunity of hearing Disallowance of broken period interest - Held that - The issue is covered in favour of the assessee by the decisions of Mumbai High Court in case of American Express International Banking Corporation Vs CIT (2002 (9) TMI 96 - BOMBAY High Court) wherein it has been held that the broken period interest is an allowable deduction. Disallowance of provision for staff frauds - Held that - Circular No.35 dated 24.11.1965 of CBDT also clarifies that the loss to embezzlement by an employee is an allowable expenditure u/s 37 of the Act. No infirmity in the order in allowing the expenditure claimed by the assessee on account of staff fraud. Interest income on NPAs - Held that - Various other High Courts in a number of cases and the respective High Courts have held that such income would accrue only when it is actually received
Issues Involved:
1. Disallowance of gratuity payment. 2. Disallowance of provision for standard assets. 3. Loss on valuation of mutual funds. 4. Disallowance of claim under Section 36(1)(viia) of the Income Tax Act. 5. Additional ground of deduction for salary arrears. 6. Revenue's appeal on broken period interest, provision for staff frauds, amortization on government securities, and interest on non-performing assets (NPAs). Detailed Analysis: 1. Disallowance of Gratuity Payment: The assessee, a Regional Rural Bank, claimed a deduction for a gratuity payment of ?3,68,54,000 made to the State Bank of India Life Insurance. The Assessing Officer (AO) disallowed this claim as the payment was made to an unapproved gratuity fund under Section 40A(7) of the Income Tax Act. The CIT(A) upheld this disallowance. However, the Tribunal noted that in the assessee's own case for earlier assessment years, the deduction was allowed following the decision of the Hon'ble Calcutta High Court in the case of Sree Kamakhya Tea Co. P. Ltd. The Tribunal thus allowed the deduction for the assessment year 2011-12 as well. 2. Disallowance of Provision for Standard Assets: The assessee claimed a deduction for a provision of ?3,02,37,921 towards standard assets. The AO disallowed this, stating that standard assets are performing assets and the provision is contingent in nature. The CIT(A) confirmed the disallowance based on the Tribunal's decision in the assessee's own case for the assessment year 2007-08. The Tribunal upheld the disallowance, following its earlier decision. 3. Loss on Valuation of Mutual Funds: The assessee claimed a loss of ?8,00,000 due to the diminution in the value of mutual funds. The Tribunal found that the CIT(A) had upheld the disallowance based on the previous year's order. The Tribunal remanded the issue to the AO for reconsideration in accordance with the decisions of the Hon'ble Supreme Court in the cases of Catholic Syrian Bank and Vijaya Bank. 4. Disallowance of Claim under Section 36(1)(viia): The assessee claimed a deduction of ?15,55,64,948 under Section 36(1)(viia) of the Income Tax Act. The AO disallowed this claim, and the CIT(A) upheld the disallowance. The Tribunal noted that this issue was covered against the assessee by its decision in the assessee's own case for the assessment year 2008-09. The Tribunal upheld the disallowance, following its earlier decision and the decision of the Hon'ble Punjab & Haryana High Court in the case of State Bank of Patiala. 5. Additional Ground of Deduction for Salary Arrears: The assessee raised an additional ground for the deduction of ?12,73,16,121 towards salary arrears. The Tribunal admitted the additional ground and remitted it to the AO for reconsideration in accordance with law and judicial pronouncements. 6. Revenue's Appeal: - Broken Period Interest: The CIT(A) allowed the assessee's claim for broken period interest, following the Tribunal's decision in the assessee's own case for earlier years. The Tribunal upheld this decision. - Provision for Staff Frauds: The CIT(A) allowed the assessee's claim for provision for staff frauds, following the Tribunal's decision in the assessee's own case for earlier years. The Tribunal upheld this decision. - Amortization on Government Securities: The Tribunal did not specifically address this issue in the provided text. - Interest on Non-Performing Assets (NPAs): The Tribunal noted conflicting decisions in the assessee's own case for different assessment years. The Tribunal followed the decision of the Hon'ble Delhi High Court in the case of CIT vs. Vasisth Chay Vyapar Ltd., which held that interest on NPAs cannot be brought to tax on a notional basis. The Tribunal rejected the Revenue's ground for the assessment year 2011-12 and allowed the assessee's ground for the assessment year 2012-13. Conclusion: The Tribunal provided relief to the assessee on various grounds, including the disallowance of gratuity payment, loss on valuation of mutual funds, and interest on NPAs. The Tribunal upheld the disallowance of the provision for standard assets and the claim under Section 36(1)(viia). The additional ground for salary arrears was remitted to the AO for reconsideration. The Revenue's appeal on broken period interest and provision for staff frauds was dismissed.
|
